Is 'Abeism' Getting In The Way Of Abenomics?

Here's an interesting note from Stephen Church at SocGen, who argues that in Japan 'Abeism' is getting in the way of 'Abenomics.'

Abenomics, as everyone knows by now, is the name given to the economic stimulus measures of Japanese PM Shinzo Abe. The most potent of the stimulus measures is aggressive monetary easing. 'Abeism' has to do with Abe's own nationalist vision for Japan.

Church argues that the latter is getting in the way of the former.

He writes:

There is the Japanese proverb about 'running after two rabbits and catching none.' Shinzo Abe is giving the impression of running after both Abeism and Abenomics. Abeism is not just a diversion from Abenomics, it is also the cause of a degree of concern. In this respect there is the Abeist 'Walking Tall' vis-À-vis China and Korea. Detailed media reporting of the background to the Abe Yasukuni Shrine visit appears to demonstrate a somewhat amateur and cavalier attitude towards accepted diplomatic norms by those advising Abe. The concern is both generalised and specific.

Abeism Explained: A Revanchist Sectarianism to Bring Back the Golden Years

Abe inherited a 'sacred trust' from his grandfather Nobusuke Kishi. It is a rightist and revanchist sectarianism organised as an Abe Super-Faction: 'Rebirth Japan' (Sosei Nippon) that looks back to the pre-war period as the golden years. Undoing the US occupation reforms is the way to get back to those golden years. Its peculiarity at international law is that it denies the international order established in 1945. The United Nations 'Big Five' were the victors and the Axis powers the defeated.

Abenomics Explained: The Four Arrows of Getting the Economy Moving Again

The long stagnation of the Japanese economy was due to the unorthodox fiscal policy (loose) and monetary policy (tight) mix. The mix should have been reversed, but was not. Arrow One (quantitative easing) and MoF Arrow 'Four' (fiscal consolidation) make that reversal. However, Arrow Two (fiscal stimulus) and Arrow Four are a wash and Arrow Three (growth policies) is proving to be something of a bureaucrat paper chase. Thus, everything hangs on the Haruhiko Kuroda BoJ. Governor Kuroda and his deputy Kikuo Iwata appear to be up to the task and all is well with Arrow One.

The report goes deeply into the tension between the two themes, and points out that Abe's focus on 'Abeism' (including his visit to a controversial war shrine that angered China) has left him with less capital, and less time to focus on things like delaying an upcoming consumption tax increase that will cancel out fiscal stimulus.

The Abeist visions were the talk of Davos in 2014, and the question of whether they will get in the way of Japan's economic comeback is certainly worth watching.